SMITHS FALLS, ON and NEW
YORK, NY, Sept. 23, 2020 /PRNewswire/ - Canopy Growth
Corporation ("Canopy Growth") (TSX: WEED) (NYSE: CGC) and
Acreage Holdings, Inc. ("Acreage") (CSE:ACRG.A.U, ACRG.B.U)
(together, the "Companies") are pleased to announce the
implementation of Acreage's previously announced amended
arrangement under section 288 of the Business Corporations
Act (British Columbia) with
Canopy Growth (the "Amended Arrangement").
Pursuant to the Amended Arrangement, Acreage's articles have
been amended to create new Class E subordinate voting shares (the
"Fixed Shares"), Class D subordinate voting shares (the
"Floating Shares") and Class F multiple voting shares (the
"Fixed Multiple Shares"). Each existing Class A subordinate
voting share of Acreage (each, a "Subordinate Voting Share")
has been exchanged for 0.7 of a Fixed Share and 0.3 of a Floating
Share, each existing Class B proportionate voting share (each, a
"Proportionate Voting Share") has been exchanged for 28
Fixed Shares and 12 Floating Shares and each existing Class C
multiple share (each, a "Multiple Voting Share") has been
exchanged for 0.7 of a Fixed Multiple Share and 0.3 of a Floating
Share.
The Fixed Shares and Floating Shares will begin trading on the
Canadian Securities Exchange (the "CSE") under the ticker
symbol ACRG.A.U and ACRG.B.U, respectively, as of the opening of
markets today.
"Thank you to the Acreage shareholders for voting in favour of
this amended arrangement and for believing in the potential Canopy
Growth can bring to their investment," shared David Klein, Canopy Growth CEO. "We are
encouraged by Acreage's recent actions to improve the focus and
financial performance of its business and begin building our brands
in the U.S., through the introduction of the Tweed brand in several
U.S. states. The amended arrangement provides Canopy the most
efficient entryway into the U.S., once federally permissible, and
we believe will continue to benefit shareholders of both companies
over the long-term."
"With today's announcement, we look forward to continuing to
build on our momentum to accelerate our pathway to profitability,"
said Bill Van Faasen, Interim CEO of
Acreage Holdings. "Canopy's Tweed branded flower has been a success
since our launch late last year, and we will continue to expand to
new markets and introduce new products and form factors. We are
also excited to develop our hemp division to meet consumer needs in
what is expected to be a $10 billion
market opportunity."
In accordance with the Amended Arrangement, upon the occurrence
(or waiver by Canopy Growth) of changes in federal laws in
the United States to permit the
general cultivation, distribution and possession of marijuana (as
defined in the relevant legislation) or to remove the regulation of
such activities from the federal laws of the United States (the "Triggering
Event"), Canopy Growth will, subject to the satisfaction or
waiver of certain closing conditions, acquire all of the issued
and outstanding Fixed Shares on the basis of 0.3048 of a common
share of Canopy Growth (each, a "Canopy Growth Share") per
Fixed Share (following the automatic conversion of the Fixed
Multiple Shares and subject to adjustment in accordance with the
terms of the arrangement agreement entered into between Acreage and
Canopy Growth on April 18, 2019, as
amended on May 15, 2019 and on
September 23, 2020 (the
"Arrangement Agreement").
In addition, Canopy Growth holds an option, exercisable at the
discretion of Canopy Growth, to acquire all of the issued and
outstanding Floating Shares at the time that Canopy Growth acquires
the Fixed Shares, for cash or Canopy Growth Shares, as Canopy
Growth may determine, at a price per Floating Share based upon the
30-day volume-weighted average trading price of the Floating Shares
on the CSE relative to the trading price of the Canopy Growth
Shares at the time of the occurrence or waiver of the Triggering
Event, subject to a minimum price of US$6.41 per Floating Share.
Holders of Acreage shares and certain securities convertible or
exchangeable into Subordinate Voting Shares as of the close of
business on September 22, 2020 (the
"Record Date"), are entitled to receive approximately
US$0.30 per share, being their pro
rata portion (on an as converted to Subordinate Voting Share basis)
of US$37,500,024 (the "Upfront
Payment") paid by Canopy Growth. It is expected that the
Upfront Payment will be distributed to such holders of record
within three business days. Shareholders of Acreage as of the
Record Date with questions regarding the Upfront Payment should
contact their broker for additional information.
In addition, in connection with the Amended Arrangement, a
subsidiary of Canopy Growth has advanced US$50 million to Universal Hemp, LLC
("Hempco"), a subsidiary of Acreage, pursuant to the terms
of a secured debenture (the "Debenture"). In accordance with
the terms of the Debenture, the funds cannot be used, directly or
indirectly, in connection with or for any cannabis or
cannabis-related operations in the United
States, unless and until such operations comply with all
applicable laws of the United
States. An additional US$50
million may be advanced pursuant to the Debenture subject to
the satisfaction of certain conditions by Hempco. The Debenture
bears interest at a rate of 6.1% per annum, matures 10 years from
the date hereof or such earlier date in accordance with the terms
of the Debenture and all interest payments made pursuant to the
Debenture are payable in cash by Hempco. The Debenture is not
convertible and is not guaranteed by Acreage.
Acreage will continue to operate as a stand-alone entity and to
conduct its business independently, subject to compliance with
certain covenants contained in the Arrangement Agreement.
Additional Details
For more information about the Amended Arrangement please see
the Acreage proxy statement and management information circular
dated August 17, 2020 (the
"Circular") which was filed with the United States
Securities and Exchange Commission (the "SEC") and is
available on the EDGAR website at www.sec.gov and under Acreage's
profile on SEDAR at www.sedar.com.
In order to receive Fixed Shares and Floating Shares in exchange
for Subordinate Voting Shares, Proportionate Voting Shares or
Multiple Voting Shares, Acreage registered shareholders must
complete, sign, date and return the letter of transmittal that was
previously mailed to each Acreage shareholder (the "Letter of
Transmittal"). The Letter of Transmittal was filed with the SEC
and is available on the EDGAR website at www.sec.gov and under
Acreage's profile on SEDAR at www.sedar.com. For those Acreage
shareholders whose shares are registered in the name of a broker,
investment dealer, bank, trust company, trust or other intermediary
or nominee, they should contact such nominee for assistance in
depositing their Subordinate Voting Shares, Proportionate Voting
Shares or Multiple Voting Shares and should follow the instructions
of such intermediary or nominee.
The Companies intend to update their respective shareholders by
press release of the following key milestones: (i) the occurrence
or waiver of the Triggering Event; (ii) the proposed effective date
for the acquisition of the Fixed Shares and, if applicable, the
Floating Shares; (iii) material developments relating to the
Amended Arrangement; and (iv) material regulatory developments in
the United States.
Advisors
Cassels Brock & Blackwell LLP
and Paul Hastings LLP acted as legal counsel to Canopy Growth.
Ernst & Young LLP (EY) acted as tax advisors to Canopy
Growth.
DLA Piper (Canada) LLP and
Cozen O'Connor acted as legal counsel to Acreage. Foros acted as
financial advisor to the Acreage board of directors and Eight
Capital provided a fairness opinion to the Acreage special
committee. Wildeboer Dellelce LLP acted as legal counsel to the
Acreage special committee.
About Canopy Growth
Canopy Growth (TSX:WEED, NYSE:CGC) is a world-leading
diversified cannabis, hemp and cannabis device company, offering
distinct brands and curated cannabis varieties in dried, oil and
Softgel capsule forms, as well as medical devices through Canopy
Growth's subsidiary, Storz & Bickel GMbH & Co. KG. From
product and process innovation to market execution, Canopy Growth
is driven by a passion for leadership and a commitment to building
a world-class cannabis company one product, site and country at a
time.
Canopy Growth's medical division, Spectrum Therapeutics is
proudly dedicated to educating healthcare practitioners, conducting
robust clinical research, and furthering the public's understanding
of cannabis, and has devoted millions of dollars toward cutting
edge, commercializable research and IP development. Spectrum
Therapeutics sells a range of full-spectrum products using its
colour-coded classification Spectrum system as well as single
cannabinoid Dronabinol under the brand Bionorica Ethics.
Canopy Growth operates retail stores across Canada under its award-winning Tweed and Tokyo
Smoke banners. Tweed is a globally recognized cannabis brand which
has built a large and loyal following by focusing on quality
products and meaningful customer relationships.
From our historic public listing on the Toronto Stock Exchange
and New York Stock Exchange to our international expansion, pride
in advancing shareholder value through leadership is engrained in
all we do at Canopy Growth. Canopy Growth has established
partnerships with leading sector names including cannabis icons
Snoop Dogg and Seth Rogen, breeding
legends DNA Genetics and Green House Seeds, as well as lifestyle
guru Martha Stewart and Fortune 500
alcohol leader Constellation Brands, to name but a few. For more
information visit www.canopygrowth.com.
About Acreage
Headquartered in New York City,
Acreage is a vertically integrated, multi-state operator of
cannabis licenses and assets in the U.S. Acreage is dedicated to
building and scaling operations to create a seamless,
consumer-focused branded cannabis experience. Acreage debuted its
national retail store brand, The Botanist in 2018 and its
award-winning consumer brands, The Botanist and Live Resin Project
in 2019.
On June 27, 2019, Acreage
implemented an arrangement under section 288 of the Business
Corporations Act (British
Columbia) with Canopy Growth, which was subsequently amended
on September 23, 2020. Pursuant to
the Amended Arrangement, upon the occurrence (or waiver by Canopy
Growth) of the Triggering Event, Canopy Growth will, subject to the
satisfaction or waiver of certain closing conditions, acquire all
of the issued and outstanding Fixed Shares on the basis of 0.3048
of a Canopy Growth Share per Fixed Share (following the automatic
conversion of the Fixed Multiple Shares and subject to adjustment
in accordance with the terms of the Arrangement Agreement.
In addition, Canopy Growth holds an option, exercisable at the
discretion of Canopy Growth, to acquire all of the issued and
outstanding Floating Shares at the time that Canopy Growth acquires
the Fixed Shares, for cash or Canopy Growth Shares, as Canopy
Growth may determine, at a price per Floating Share based upon the
30-day volume-weighted average trading price of the Floating Shares
on the CSE relative to the trading price of the Canopy Growth
Shares at the time of the occurrence or waiver of the Triggering
Event, subject to a minimum price of US$6.41 per Floating Share.
For more information about the Amended Arrangement please see
the Circular and the respective information circulars of each of
Acreage and Canopy Growth dated May 17,
2019, which are available on Acreage's and Canopy Growth's
respective profiles on SEDAR at www.sedar.com and filed with the
SEC on the EDGAR website at www.sec.gov. For additional information
regarding Canopy Growth, please see Canopy Growth's profile on
SEDAR at www.sedar.com.
Notice Regarding Forward Looking Statements
This news release contains "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and "forward-looking information" within the
meaning of applicable Canadian securities legislation. Often, but
not always, forward-looking statements and information can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "estimates", "intends", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking statements or information involve known
and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Companies or
their respective subsidiaries to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements or information contained in this
news release. Examples of such statements include statements with
respect to the trading of the Fixed Shares and the Floating Shares
on the CSE, the timing of receipt of the Upfront Payment, the
occurrence or waiver of the Triggering Event, the satisfaction or
waiver of the closing conditions set out in the Arrangement
Agreement and the additional advance pursuant to the terms of the
Debenture.
Risks, uncertainties and other factors involved with
forward-looking statements or information could cause actual
events, results, performance, prospects and opportunities to differ
materially from those expressed or implied by such forward-looking
statements or information, including the occurrence of changes in
U.S. federal laws regarding the cultivation, distribution or
possession of marijuana; the likelihood of the Triggering Event
being satisfied or waived by the outside date; the ability of the
Companies to satisfy, in a timely manner, the conditions to closing
following the satisfaction or waiver of the Triggering Event; the
likelihood of Canopy Growth completing the acquisition of the Fixed
Shares and/or Floating Shares; other expectations and assumptions
concerning the transactions contemplated between the Companies; the
available funds of Acreage and the anticipated use of such funds;
the availability of financing opportunities for Acreage and the
risks associated with the completion thereof; regulatory and
licensing risks; changes in general economic, business and
political conditions, including changes in the financial and stock
markets; risks related to infectious diseases, including the
impacts of COVID-19; legal and regulatory risks inherent in the
cannabis industry, including the global regulatory landscape and
enforcement related to cannabis, political risks and risks relating
to regulatory change; risks relating to anti-money laundering laws;
compliance with extensive government regulation and the
interpretation of various laws regulations and policies; risk
associated with divesting certain assets; public opinion and
perception of the cannabis industry; and such other risks contained
in the public filings of Canopy Growth filed with the SEC and
available on the EDGAR website at www.sec.gov and on Canopy
Growth's profile on SEDAR at www.sedar.com, including Canopy
Growth's annual report on Form 10-K for the year ended March 31, 2020 (as amended) and in the public
filings of Acreage filed with the SEC and available on the EDGAR
website at www.sec.gov and on Acreage's profile on SEDAR at
www.sedar.com, including the Circular and Acreage's annual report
on Form 10-K for the year ended December 31,
2019 (as amended).
In respect of the forward-looking statements and information,
the Companies have provided such statements and information in
reliance on certain assumptions that they believe are reasonable at
this time. Although the Companies believe that the assumptions and
factors used in preparing the forward-looking statements and
information in this news release are reasonable, undue reliance
should not be placed on such information and no assurance can be
given that such events will occur in the disclosed time frames or
at all. The forward-looking statements and information included in
this news release are made as of the date of this news release and
the Companies do not undertake any obligation to publicly update
such forward-looking statements or information to reflect new
information, subsequent events or otherwise unless required by
applicable securities laws.
There can be no assurance that the Triggering Event or the
acquisition of the Fixed Shares and/or the Floating Shares will
occur, or that such events will occur on the terms and conditions
contemplated in this news release. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks. Investors are cautioned that, except as
disclosed in the Circular, any information released or received
with respect to the Amended Arrangement may not be accurate or
complete and should not be relied upon.
The CSE has not reviewed, approved or disapproved the content
of this news release.
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SOURCE Canopy Growth Corporation